Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — H1 F2014 Earnings Presentation

44 slides from Southern Sun's earnings presentation, November 2013

1. Slide 1: Presentation to Analysts and Investors

   Presentation to: Analysts and Investors November 2013

2. Slide 2: Group Structure

   Group Structure Public 41.3% 39.6% 19.1% 100% 100% 2

3. Slide 3: Gaming Portfolio

   Gaming Portfolio Gauteng KZN Y MONTECASINO SUNCOAST Y ©) Gold Reef City GOLDEN HORSE SILVERSTAR BLACKROCK Western Cape THE CALEDON a) Y GARDEN ROUTE MgkKONOS Mpumalanga 7] EMNOTWENI THE RIDGE Eastern Cape NZ HEMINGWAYS CASINO Y TSOGO SUN GAMING Free State 4 GOLDFIELDS © TSOGO SUN

4. Slide 4: Hotel Portfolio

   Yy Hotel Portfolio 1s0cn SUN HOTELS Luxury Each hotel offers guests world-class style, unparalleled service and accommodation and signature touches that define luxury travel. \) AY A\ | A | BEVERLY HILLS With products and services that meet the needs of tomorrow's savvy global travellers, whether tr

5. Slide 5: Management and Board

   Management and Board  TSH Board of Directors ● Executive Directors  Marcel von Aulock– Group CEO  Rob Huddy – Group CFO ● Non-Executive Directors  Johnny Copelyn (Chairman)  Jabu Mabuza (Deputy Chairman)  Marcel Golding  Elias Mphande  Graham Mackay  Jamie Wilson  Malcolm Wyman  Rex Tomli

6. Slide 6: Management and Board

   Management and Board  Group Executive Committee ● Corporate ● Gaming  Marcel von Aulock – Group CEO  Jacques Booysen – MD Gaming  Rob Huddy – Group CFO  Greg Lunga – FD Gaming  Noeleen Bruton – Marketing Director ● Hotels  Vusi Dlamini – Group HR Director  Richard Weilers – COO and MD Offsho

7. Slide 7: Segmental Analysis

   © TsOGO SUN Segmental Analysis

8. Slide 8: Group – Revenue and Ebitdar (Rm)

   Group – Revenue and Ebitdar (Rm) H1 F’14 H1 F’13 % Change Revenue Gaming 3 978 3 718 7 Net gaming win 3 364 3 186 6 Other 614 532 15 Hotels SA 1 010 910 11 Hotels Offshore 256 179 43 Corporate (intra-group-elimination) (20) (17) * Total Group 5 224 4 790 9 Ebitdar Gaming 1 584 1 494 6 Hotels SA 314

9. Slide 9: Tsogo Sun Segmental (Rm)

   Tsogo Sun Segmental (Rm) Income Ebitdar Ebitdar Margin H1 F’14 H1 F’13 H1 F’14 H1 F’13 H1 F’14 H1 F’13 Montecasino 1 185 1 109 524 495 44.3 44.6 Suncoast 737 688 344 324 46.7 47.1 Gold Reef City 639 597 251 231 39.3 38.7 Silverstar 316 292 127 113 40.2 38.8 The Ridge 204 193 96 91 47.1 47.4 Hemingwa

10. Slide 10: Gaming

    Key Strategic Issues Gaming 10

11. Slide 11: Key Strategic Issues - Gaming: Montecasino

    Key Strategic Issues - Gaming  Montecasino ● Additional 700 gaming positions approved ● Planning for casino expansion including internal refresh, multipurpose venue, additional parking, an additional hotel and an entrance from Witkoppen Road ● Share of surrounding land acquired for office and other

12. Slide 12: Key Strategic Issues - Gaming: Silverstar

    Key Strategic Issues - Gaming  Silverstar ● Additional 400 gaming positions approved ● Need improved offering for the target market ● R560m redevelopment including additional dining options, outdoor events area, cinemas, ten-pin bowling alley, laser tag games, expanded casino offering, parking, red

13. Slide 13: Key Strategic Issues - Gaming: Gold Reef City

    Key Strategic Issues - Gaming  Gold Reef City ● Additional 400 gaming positions approved ● R630m refurbishment and expansion including casino offering, cinemas, additional food and beverage outlets and improved access systems at the Theme Park with an improved linkage to the casino complex, upgrade

14. Slide 14: Key Strategic Issues - Gaming: Suncoast

    Key Strategic Issues - Gaming  Suncoast ● Application to KZN Gaming Board for an additional 900 machines and 16 tables ● R1.5bn – R1.8bn expansion (including a R100m CSI contribution) including additional casino space and new Privé, 22,000sqm destination retail and additional restaurants, multifunc

15. Slide 15: Key Strategic Issues - Gaming: Emnotweni

    Key Strategic Issues - Gaming  Emnotweni ● Expansion programme with spend of R206m including casino refurbishment with additional positions, conference and events area, restaurants and additional parking ● Completion end November 2013 15

16. Slide 16: Key Strategic Issues - Gaming: Blackrock, Golden Horse

    Key Strategic Issues - Gaming  Blackrock ● KwaZulu-Natal Gambling Board granted application for additional 50 slot machines and 3 tables ● CSI contribution of R2m ● Expansion of Garden Court Blackrock by an additional 40 rooms commenced in July 2013  Golden Horse ● Southern Sun Pietermaritzburg at

17. Slide 17: Key Strategic Issues - Gaming: Licences and Smoking

    Key Strategic Issues - Gaming  Mpumalanga 4th licence ● Mpumalanga Gambling Board withdrew the RFP on 25 July 2013 on the basis that the RFP did not clearly stipulate the MGB’s intentions in respect of shareholding and profit entitlement by black persons within the province  Western Cape metropole

18. Slide 18: Gaming Win (Rm)

    Gaming Win (Rm) H1 F’14 H1 F’13 % Change Gaming win Tables 770 677 13.7 Slots 2 594 2 508 3.4 3 364 3 185 5.6 Drop/hold % – tables 22.1 22.0 Handle/win % – slots 5.2 5.3 H1 F’14 H1 F’13 % Change Gauteng 1 795 1 693 6.0 KwaZulu-Natal 884 837 5.6 Mpumalanga 295 282 4.6 Western Cape 188 183 2.7 Other 2

19. Slide 19: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Monte- Gold Reef Silver- Growth in Gaming win (%) Gauteng casino City star Calendar years 2000 Monte vs Sundome 25.0 (4.9) 2001 Other casinos opened 5.8 20.9 2002 13.9 16.5 2003 11.0 9.6 2004 18.9 15.5 2005 11.1 13.2 2006 14.9 14.5 2007 13.1 12.6 2008 7.8 (6.8) (1.0) * 20

20. Slide 20: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues KwaZulu- Growth in Gaming win (%) Natal Suncoast Golden Horse Blackrock Calendar years 2004 24.5 37.3 2005 24.7 22.5 2006 16.2 15.1 2007 19.6 15.6 2008 6.9 8.3 2009 4.6 5.0 1.4 5.5 2010 4.4 4.6 4.1 10.1 2011 7.3 5.3 9.2 10.8 2012 10.0 10.8 8.9 11.6 3 months to September 2013

21. Slide 21: Other Gaming Tax Revenues

    Other Gaming Tax Revenues Growth in Gaming win (%) Province Unit Unit Unit Mpumalanga Ridge Emnotweni 3 months to September 2013 1.6 2.2 (2.5) 6 months to September 2013 5.3 4.7 2.1 Western Cape The Caledon Mykonos Garden Route 3 months to September 2013 5.6 8.2 (1.2) 2.1 6 months to September 2013

22. Slide 22: Hotels

    Key Strategic Issues Hotels 22

23. Slide 23: Hotels – Portfolio Philosophy

    Hotels – Portfolio Philosophy Land Buildings Operations Management Brand  Ideally own all components ● Tsogo Sun Hotels strategic advantage in scale ● More capital intensive but allows substantially higher return on effort ● Retains control of the assets providing extended tenure and resilience  L

24. Slide 24: Owned and Managed

    Owned and Managed Hotels Rooms Owned Managed Luxury 6 1 113 410 703 Full Service 20 4 260 3 723 537 Owned includes leased hotels and Select Service 28 5 024 3 728 1 296 associates Budget 23 1 690 1 690 - Timeshare & Resorts 7 1 161 307 854 South Africa 84 13 248 9 858 3 390 Offshore 8 1 072 746 326

25. Slide 25: SA System-wide Rooms Sold Annual History

    SA System-wide Rooms Sold Annual History 76.0% 3 250 000 74.0% 3 050 000 72.0% 2 850 000 70.0% 2 650 000 68.0% 2 450 000 66.0% 2 250 000 64.0% 2 050 000 62.0% 1 850 000 60.0% 1 650 000 58.0% 56.0% 1 450 000 54.0% 1 250 000 F'94 F'95 F'96 F'97 F'98 F'99 F'00 F'01 F'02 F'03 F'04 F'05 F'06 F'07 F'08 F'

26. Slide 26: Key Strategic Issues : Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Good growth in Key accounts, Government and Leisure segments  Transient Corporate business remains weak  Occupancy reduced 1.9pp for H1 F’14 on the prior year mainly due to sports events in June 2012  Average room rate growth of 10% for H1 F’14 on th

27. Slide 27: Key Strategic Issues : Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Sun 1 (formerly Hotel Formula 1) ● Occupancy for H1 F’14 at 63.1% compared to 66.1% in the prior period ● Reflects the weakness in transient business ● Rebranded Sun 1 effective 1 October 2013 ● Continued refurbishment of the portfolio 27

28. Slide 28: Key Strategic Issues : Hotels – Offshore

    Key Strategic Issues : Hotels – Offshore  Offshore hotels remain strong in US$ (occupancies H1 F’14 : 70.1%, H1 F’13 : 73.0%)  Currency positive impact to trading due to Rand weakness against US$ and Euro exchange rates  Forex gain for H1 F’14 R29m (H1 F’13 R13m) on cash and monetary items denomi

29. Slide 29: Financial Overview

    Financial Overview YW TSOGO SUN

30. Slide 30: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’14 H1 F’13 % Change Group income 5 224 4 790 9 Net gaming win 3 364 3 186 6 Revenue Rooms 1 060 908 17 F&B 489 403 21 Other 311 293 6 Ebitdar 1 997 1 829 9 Gaming 1 584 1 494 6 Hotels – SA 314 272 15 – Offshore(1) 75 46 63 Forex 29 13 * Corporate (5) 4 * Ebitdar ma

31. Slide 31: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’14 H1 F’13 % Change Ebitdar 1 997 1 829 9 LTI costs (85) (64) (33) Property rentals (107) (94) (14) Amortisation & depreciation (322) (332) 3 Exceptional items (75) 1 * Net finance costs (182) (213) 15 Associates and JVs (3) (1) * Tax (345) (325) (6) Non-controllin

32. Slide 32: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) H1 F’14 H1 F’13 % change Attributable earnings 833 743 12 Capital asset disposal profits - (1) FV adjustment to associate 6 - Impairment of SSME goodwill - 16 Impairment of PPE 7 9 Headline earnings 846 767 10 Transaction costs 8 - CBS loan impairment reversal (1) (1) SSME termina

33. Slide 33: Group Cash Flow (Rm)

    Group Cash Flow (Rm) H1 F’14 H1 F’13 Ebitdar per income statement 1 997 1 829 Property rentals (107) (94) Ebitda 1 890 1 735 Working capital/exceptional items adjusted for non-cash (161) 18 Dividends income from associates 3 3 Cash generated from operations 1 732 1 756 Interest paid (net) (200) (214

34. Slide 34: Investment Activities (Rm)

    Investment Activities (Rm) H1 F’14 H1 F’13 Investments/Loans Acquisition of DAV/AWM/Suncoast minority (363) - Transaction costs re DAV/AWM share buy-back (4) - Acquisition of SS Ikoy – equity (506) - Acquisition of Affirmed Investments minorities (14) - Investments in land and loans (61) - Investmen

35. Slide 35: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) H1 F’14 H1 F’13 Non-controlling interests funding 33 33 External debt (US$ based) 568 - External debt (Rand based) 4 926 5 218 Gross IBD 5 527 5 251 Cash on hand (656) (1 125) Net IBD 4 871 4 126 Dividend of R560m (51c per share) declared May 2013, paid June 2013 Dividend

36. Slide 36: Strategic Priorities

    BS © TSOGO SUN Strategic Priorities

37. Slide 37: Strategic Priorities

    Strategic Priorities  Sustainability ● Beneficiaries  Current shareholding and CSI programs are effective ● Financial stability  Strong cash flow, low gearing and adequate facilities  Own most of our assets ● Product relevance  Adequate maintenance capex provided  Strong development skills in-

38. Slide 38: Strategic Priorities

    Strategic Priorities  Growth ● Organic  Significant focus on getting more out of our existing businesses  Continued cost focus  Systems and values ● Inorganic  New projects 38

39. Slide 39: Future Prospects

    Future Prospects @YTSOGO SUN

40. Slide 40: Future Prospects

    Future Prospects  Group ● Strong cash generation ● Growth opportunities still being pursued ● Re-launch loyalty programmes ● Maximise brand value ● Employee engagement programme ● Food and beverage focus 40

41. Slide 41: Future Prospects

    Future Prospects  Gaming ● Gaming win growth – medium term outlook uncertain  Need consumers to get wealthier and, more importantly, feel wealthier  Regulatory issues remain a threat  Tax – national/provincial  Total smoking ban remains a risk ● Western Cape metropole ● Mpumalanga fourth casino

42. Slide 42: Future Prospects

    Future Prospects  Hotels ● Occupancy and rate still under pressure until transient Corporate demand recovers ● Focus on customer satisfaction, brand awareness and distribution ● Opportunistic in SA – Land bank, acquire leases, new builds and acquisitions ● Continued pursuit of offshore expansion 

43. Slide 43: Thank you

    Thank you ©W TSOGO SUN

44. Slide 44: Y TSOGO SUN

    Y TSOGO SUN

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